Impairment Loss On July 1, 2018m Karen Company purchased equipment for $325,00; the estimated useful life was 10 years and expected salvage value was $40,000. Straight Line depreciation is used. On July 1, 2022, economic factors cause the market value of the equipment to decrease to $90,000. On this date, Karen evaluates if the equipment is impaired and estimates future cash flows relating to the use and disposal of the equipment to be $195,000.

Is the equipment impaired at July 1, 2022? Explain.

If the equipment is impaired at July 1, 2022, calculate the amount of the impairment loss.

If the equipment is impaired at July 1, 2022, prepare the journal entry to record the impairment loss.